0000932471-08-001245.txt : 20160425
0000932471-08-001245.hdr.sgml : 20160425
20080606112555
ACCESSION NUMBER: 0000932471-08-001245
CONFORMED SUBMISSION TYPE: CORRESP
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20080606
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VANGUARD HORIZON FUNDS
CENTRAL INDEX KEY: 0000932471
IRS NUMBER: 232787277
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1031
FILING VALUES:
FORM TYPE: CORRESP
BUSINESS ADDRESS:
STREET 1: P O BOX 2600
STREET 2: V26
CITY: VALLEY FORGE
STATE: PA
ZIP: 19482
BUSINESS PHONE: 6106691000
MAIL ADDRESS:
STREET 1: P.O. BOX 2600
STREET 2: V26
CITY: VALLEY FORGE
STATE: PA
ZIP: 19482
FORMER COMPANY:
FORMER CONFORMED NAME: VANGUARD HORIZON FUND INC
DATE OF NAME CHANGE: 19941107
CORRESP
1
filename1.txt
[SHIP LOGO VANGUARD /(R)/]]
P.O.Box 2600
Valley Forge,PA
19482-2600
610-669-6893
edward_delk@vanguard.com
June 5, 2008
Christian Sandoe, Esq.
U.S. Securities & Exchange Commission via electronic filing
100 F Street, N.E.
Washington, DC 20549
RE: VANGUARD HORIZON FUNDS, FILE NO. 33-56443 (THE "TRUST")
Dear Mr. Sandoe:
The following responds to your comments of May 23, 2008 on the
post-effective amendment of the registration statement of the Trust. You
commented on Post-Effective Amendment No. 34, which was filed on April 11, 2008.
COMMENT 1: MORE ON THE FUND - MARKET EXPOSURE
COMMENT: The investment style risk flag on page 7 states that the Fund
is exposed to risks related to small- and mid-capitalization stocks. Does the
Fund have a strategy to invest in small- and mid-cap stocks? If so, please
disclose this strategy.
RESPONSE: On page 10 under Security Selection in the paragraph above
manager risk, we state "As a secondary investment strategy, the Fund will own
companies with market values of less than $15 billion, which are considered
small- to mid-cap by the Fund's investment advisors. However, the advisors will
frequently select stocks with higher market values as well." Because investing
in small- and mid-cap stocks is a secondary investment strategy, and is not the
primary investment strategy, we do not plan to add small- and mid-cap stock
disclosure to the primary investment strategy section. The investment style risk
disclosure concerning small- and mid-capitalization stocks includes the
parenthetical "(this risk applies only to the extent that the Fund's assets are
invested in small- and mid-capitalization stocks)" in order to show that this
risk is primary only to the extent that the Fund invests in such stocks.
Christian Sandoe, Esq.
June 6, 2008
Page 2
COMMENT 2: MORE ON THE FUND - FOREIGN STOCKS
COMMENT: Although the country/regional and currency risk flags on page
10 state that "the Fund may invest a large portion of its assets in securities
of companies located in any one country or region," the "Primary Investment
Strategies" section does not describe this strategy. If the Fund has this
strategy, please describe it. Also, please address whether the Fund is exposed
to country-specific risk based on investing "a large portion of its assets in
securities located in any one country."
RESPONSE: The Fund does not have a principal investment strategy of
investing a large portion of its assets in securities of companies located in
any one country or region, although it may so invest from time to time. Because
the Fund may invest a large portion of its assets in securities of companies
located in any one country or region, we believe it is appropriate to address
that fact as a distinct risk factor. If the Fund were to actually invest in that
manner, we would at that time revise the risk disclosure to address any material
country- or region-specific risks.
COMMENT 3: INVESTMENT ADVISORS - PTA THE FUND'S PORTFOLIO MANAGERS
COMMENT: Please confirm Vanguard's definition of "co-manager" as used
in this section.
RESPONSE: Vanguard uses the term "co-manager" to describe relationships
where portfolio managers are equals with respect to managing portfolio assets.
Please note that our use of the term "co-manager" is in part a response to your
request (with respect to an Vanguard International Growth Fund 485(a) filing a
few months ago) that we consider using that term more broadly in situations
involving a joint portfolio management arrangements involving equal
decision-making authority for the same fund or sub-portfolio.
COMMENT 4: FINANCIAL HIGHLIGHTS - FINANCIAL HIGHLIGHTS TABLE
COMMENT: Please explain supplementally why the Fund's "Turnover Rate"
increased significantly from 2004 to 2007.
RESPONSE: The Fund's turnover rate increased after adding an investment
advisor (Acadian Asset Management LLC) in October 2004. The additional adviser
uses a quantitative management style, which is a different style that of
Marathon Asset Management LLP, the Fund' sole advisor prior to 2004, and tends
to have a higher turnover rate.
COMMENT 5: STATEMENT OF ADDITIONAL INFORMATION - INVESTMENT ADVISORY SERVICES -
GLOBAL EQUITY FUND - BAILLIE GIFFORD OVERSEAS LTD. - DESCRIPTION OF COMPENSATION
COMMENT: Text on Page B-37 of the SAI, under the heading "Description
of Compensation," states that the portfolio manager's bonus is determined, in
part, by "investment performance" as "measured against the relevant benchmark."
Please clarify whether the manager's performance is based on a pre-tax or
post-tax basis.
RESPONSE: We will revise the disclosure to clarify that the manager's
performance is calculated on a pre-tax basis, as follows:
Christian Sandoe, Esq.
June 6, 2008
Page 3
As employees of the firm, Mr. Adair and Mr. MacColl receive
compensation with three key elements: (i) base salary, (ii) a
company-wide all-staff bonus, and (iii) a performance-related
bonus referred to as the Investment Departments' Incentive
Bonus Scheme. The performance-related bonus is based 50% on
individual performance and 50% on investment performance
(determined on a pre-tax basis). The latter is calculated on a
team basis and is measured over a one- and three-year period
(with a weighting of 25%/75%). This performance is measured
against the relevant benchmark.
TANDY REQUIREMENTS
AS REQUIRED BY THE SEC, EACH FUND ACKNOWLEDGES THAT:
o The Fund is responsible for the adequacy and accuracy of the disclosure in the
filing.
o Staff comments or changes in response to staff comments in the
filings reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing.
o The Fund may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Please contact me at (610) 669-6893 with any questions or comments
regarding the above responses and explanations.
Sincerely,
Edward C. Delk
Principal